The side hustle started small. A few weekend jobs, some design work for a friend of a friend, a market stall, a bit of driving. Then the money kept coming in, and now it is tax time, and you are not sure what the ATO expects you to do about it.
This is one of the most common questions we get from people across Greater Sydney, and the answer is usually simpler than people fear. It is also more urgent than they realise, because 31 October is closer than it looks.
Here is what you actually need to know.
If it made you money, it goes on your return
Start with the general rule. Income you earn in Australia is assessable, and that does not change because the work happened on a Saturday, or came through an app, or only added up to a few thousand dollars.
Business.gov.au puts it plainly: if your side hustle makes you money, you need to declare it on your tax return.
The exception is a genuine hobby. If your activity really is a hobby, you do not declare the income, but you also cannot claim any of the costs. The catch is that most people who ask us this question have already moved past hobby territory without noticing.
The ATO does not use a dollar figure to decide
There is a persistent myth that you can earn a certain amount before any of this applies. There is no such threshold.
Business.gov.au lists the factors that point towards a business rather than a hobby:
- You intend to make a profit, or genuinely believe you will
- You have taken steps like registering a business name or getting an ABN
- You repeat similar activities on an ongoing basis
- The size or scale is consistent with others in your industry
- The activity is planned, organised and carried out in a businesslike way, with records and a separate bank account
No single factor decides it. It is the overall picture. Someone selling a few unwanted items online is in a very different position to someone posting new stock every week and reinvesting the takings.
We have written a fuller guide on where that line sits in when should you register your side hustle as a business. It is worth reading if you are still unsure which side you are on.
The ATO probably already knows about it
This is the part that surprises people.
Under the Sharing Economy Reporting Regime, digital platforms have to collect information about the people earning income through them and report it to the ATO. Ride-share and short-term accommodation platforms have been reporting since July 2023. From July 2024, the regime extended to other reportable transactions across the wider platform economy.
Platforms report twice a year, in January and July.
So if your income came through an app or an online marketplace, there is a reasonable chance the ATO has a record of it before you lodge. Leaving it off the return is not a gap they have to go looking for.
Where it goes on your return
This depends on whether you have an ABN.
Without an ABN, side income is generally declared in the other income section of your individual return.
With an ABN, you are reporting as a sole trader, and the income and expenses go in the business section of the return.
Worth knowing: an ABN is free to get. If you are invoicing other businesses, not having an ABN costs you real money up front.
The trap that produces a surprise tax bill
Most people running a side hustle also have a regular job. That is where the problem usually starts.
Your employer withholds tax from your wage across the year. Nobody withholds anything from your side hustle income. The tax-free threshold is not an allowance you get twice; it applies once across all of your income together.
The practical result is that side hustle income sits on top of your salary and is taxed at your marginal rate, and none of it has been paid in advance. People who earned an extra $15,000 on the side and spent all of it are the ones who get a nasty shock in October.
The fix is not complicated. Set aside a percentage of every payment as it comes in, into a separate account you do not touch. What percentage depends on your total income, which is a conversation worth having before the year ends rather than after.
Keep the records, or you cannot claim the costs
If you are in business, you can claim deductions for expenses that genuinely relate to earning that income. What you can claim depends on your circumstances and how the expense was actually used, so it is not a matter of copying someone else’s list.
What is not negotiable is proof. Records generally need to be kept for five years from when you got them or completed the transaction, whichever is later. They need to be in English, and digital copies are fine as long as they are a true and clear reproduction.
If you are still keeping receipts in a shoebox or a phone gallery, this is the year to change that. Sorting it out now costs an hour. Reconstructing a year of records in October costs a weekend, and you will still miss things.
Two things that catch people in year two
- GST. You need to register for GST once your turnover hits $75,000, and the ATO gives you 21 days from when you are required to register. Ride sourcing and taxi drivers have to register regardless of turnover, with no threshold at all. Growing past $75,000 without noticing is a genuine risk when the income is arriving in small amounts.
- PAYG instalments. Once your side hustle income is established, the ATO may enter you into the PAYG instalments system, which means paying tax through the year rather than in one hit. It is a cash flow change more than a cost, but it is one people are not expecting.
Why 31 October actually matters
31 October is the deadline to lodge your own return.
Here is the part most people miss. A registered tax agent can generally lodge later than that under their own lodgment program, but you have to already be their client. The ATO’s guidance is clear: if you are using a tax agent for the first time, or changing agents, you should contact them before 31 October to be part of that program.
Miss that window, and you are lodging yourself to the October date with whatever records you happen to have.
If your side hustle has grown to the point where you are asking these questions, getting on an agent’s books before the end of October is the single most useful thing you can do this month.
Talk to us before the deadline, not after it
We work with people across Schofields, the Hills District, and right around Australia who started something on the side and watched it turn into a real business. The questions are almost always the same — what do I declare, what can I claim, what should I be setting aside, and do I need to change anything about how this is set up?
Those answers depend on your circumstances, which is exactly why they are worth a conversation rather than a search result.
Get in touch with our team to talk through your situation. If your side hustle is closer to a full-time move than a weekend earner, our guide on going full-time with your side hustle covers what to work out before you jump.
This article is general information only and does not take your personal circumstances into account. Speak with a registered tax agent about your own situation.
